Sony's new PlayStation Vita handheld console is forecast to generate $2.2 billion (£1.4bn) in hardware sales in 2012 alone, but this may not be enough to revitalise the struggling Sony Consumer division.

Strategy Analytics has now estimated that the Vita, which was launched in Japan last December, will sell 12.4 million units globally in 2012, generating £2.2bn in hardware revenue. However, the firm notes that this estimate is "assuming a price cut sometime this year".

It also said that given the small margin on hardware sales, the Vita is expected to increase revenue at Sony's portable hardware business by only around $800m, meaning it will not be the 'white knight' to turn around Sony's ailing consumer electronics business.

Despite the Vita's strong content lineup and various features, Strategy Analytics said that it faces "enormous challenges if it is to succeed in an increasingly converging marketplace", particularly from the growth of smartphones and tablets.

Jia Wu, senior analyst for Connected Home Devices at Strategy Analytics, said that the "real value" of the Vita will be the opportunity to sell games, videos and other content through the PlayStation Store and Sony Entertainment Network.

"We believe that PlayStation Vita will cause Sony's 2012 portable console software revenue to grow by $800 million compared with 2011," said Wu.

"Although it's too small a device to turn the company around in terms of financial contribution, we expect it to bring in $2 billion incremental revenue from both hardware and software sales in 2012.

"Crucially the cross-platform availability of content will also boost Sony's position in competition with giants Apple, Samsung and Microsoft. Sony can leverage its console gaming business, which Apple and Samsung do not have, to build its online content cloud.

"Despite the popularity of Xbox 360, Microsoft lacks a serious portable console and mobile gaming device. So with PlayStation Vita, Sony further strengthens its brand, device competition and future content reach - even if the console hardware itself will not generate much profit."

Smartphones and tablets are increasingly cannibalising the console market, as users have one or more devices already that can play games that may not be as sophisticated as console titles, but are "good enough for many casual gamers".

This means that the Vita will need to offer much more to the gaming market in order to differentiate itself from rival devices, and also justify its high sticker price.

Jia Wu commented: "To survive the march of smartphone's entering the casual gaming space, Sony needs to achieve the Holy Grail of inventing innovative new gameplay whilst at the same time investing heavily in exclusive content."

Strategy Analytics believes that Sony will have to introduce a price cut for the Vita at some point this year, echoing the successful strategy of Nintendo when the 3DS struggled to gain the favour of consumers. Nintendo's decision to slash the price of the 3DS from $249 to $169 in 2011 was seen as key in reviving sales of the console

Sales of the Vita in Japan initially were buoyant, including the WiFi version at $249 shifting 300,000 units in the first week, but that soon slumped to around 20,000 units per week as the hardcore fans had already made their purchase.

The analyst firm said that despite the solid design of the Vita, it is hard to encourage consumers to buy a dedicated games handheld games console above the $200 price range, particularly the more expensive 3G models. This means that a price cut will be essential to offset the expected slump in sales after the initial flurry of excitement.